The Government Makes a Bizarre Argument in Fannie Mae Case
These plaintiffs lack Article III standing to maintain their takings claim because they did not own the property alleged to have been taken until many months after the alleged taking occurred.
Peter Chapman writes:
The argument is nonsense. In America, the bundle of rights that attach to a security do not change based on the identity of the holder. Here are some legal citations for that proposition:
— In re Lorraine Castle Apartments Bldg. Corp., 149 F.2d 55, 57-58 (7th Cir.), cert. denied, 326 U.S. 728 (1945) (“[T]he prices which security holders pay for their securities in no wise affects the measure of their participation in reorganization or their voting power.”);
— Standard Gas & Elec. Co. v. Deep Rock Oil Corp., 117 F.2d 615, 619 (10th Cir.), cert. denied, 313 U.S. 564 (1941); and
— Security-First Nat’l Bank v. Rindge Land & Navigation Co., 85 F.2d 557, 561 (9th Cir.), reh’g denied, 86 F.2d 3 (9th Cir.), cert. denied, 299 U.S. 613 (1936), reh’g denied, 300 U.S. 686 (1937) (“The legal value or property right in an obligation is the right to recover from the maker to the entire extent of his promise to pay. The consideration given for a security by the holder thereof is immaterial.”).
A copy of Judge Firestone’s Textainer Equipment Management decision on which our Government relies is available at http://bit.ly/1IyxePx and is easily distinguishable from the shareholder claims asserted in Fairholme v. U.S.